GST has hit tourism very badly

Union MoS Tourism Alphons Kannanthanam addresses after the inauguration of the new school building at Kendriya Vidyalaya SAP in Thiruvananthapuram, Kerala on February 24, 2019.

The recent report of World Travel and Tourism Council, which is the biggest world body on tourism, has ranked India number three in tourism sector after China and United States.

Union Minister of State (independent charge) for Tourism Alphons Joseph Kannanthanam is a multi-faceted public figure. He is an advocate and a bureaucrat-turned-politician. As an IAS officer of 1979 batch Kerala cadre, Alphons received his first global recognition in 1989 when he was included in Time magazine’s list of “100 Young Global Leaders” for making Kottayam the first 100 per cent literate town in India. He again rose to prominence in 1994 when as Commissioner, Delhi Development Authority, he demolished illegal buildings and reclaimed lands worth more than Rs 10,000 crore in the national capital. He earned the title of the “Demolition Man” and was again featured in Time’s list of young global leaders. After being in the IAS for 27 years, he resigned in 2006 and contested legislative elections in Kerala as an independent candidate. In 2011 he joined the BJP and was later inducted into the Narendra Modi government as tourism minister.

Alphons spoke to VIJAY THAKUR on a range of issues. Excerpts:

Q: Indian tourism is a sector which has been ignored for long and could not get its share of world tourism. Your comments?

A: It is a fact that tourism is the bigger employment-generating industry after agriculture. Our government has taken it up on top priority. As a result, the recent report of World Travel and Tourism Council, which is the biggest world body on tourism, has ranked India number three in tourism sector after China and United States. The ranking is based on four indicators ~ contribution of tourism to GDP, money spent by foreign tourists and domestic tourists and investment in the tourism sector. This clearly indicates that the Indian tourism sector is growing steadily. Another indication is that in 2013-14, nearly 67.2 million people were employed in the tourism sector, which increased to 81.2 million people in the last fiscal. This information is based on Tourism Satellite Account (TSA) ~ a yardstick laid down by the UNWTO (United Nations World Tourism Organisation). Today, 12.38 per cent employment is coming from tourism sector only ~ this is highest after agriculture sector in the country, revealed the recent NCAER report (National Council of Applied Economic Research). Our income from foreign tourists is around Rs 1,77,000 crore. Look at the profit posted by Indian PSU ITDC ~ in 2013-14 it was a mere Rs 9.42 lakhs and last year it increased to Rs 23.61 crore. In a nutshell, Indian tourism industry has done extremely well in the past few years.

Q: So, you are happy with its performance. Do you have some new areas and avenues to explore?

A: There is no doubt growth in Indian tourism industry is very impressive and we have done extremely well. But, we are still not happy and want to do more. There is great scope in this sector and the possibilities to grow are an amazing story. New areas are coming up for tourism industry like medical tourism. It has huge business potential. India has infrastructure, it has very good and specialised hospitals, highly qualified doctors. World over revenue from medical tourism is around $25 billion, presently we are earning just $3 billion. Government has laid special stress on it as a result of which in 2014 there were only 1.39 lakh medical tourists, but last year it was 4.95 lakhs ~ a jump of about 255 per cent. This growth would continue and we could see huge potential and exponential growth in this sector. India has to explore such new areas of tourism.

Q: What is the biggest hurdle in promoting foreign tourism and what needs to be done to make it globally more competitive?

A: It is a fact that India is not very competitive when it comes to attracting foreign tourists. Though we have jumped 25 positions in the past four years still there are many issues which are unresolved. And the GST regime is one of the biggest hurdles. It has hit the Indian tourism industry very badly, particularly high-end foreign tourists. All this is due to high GST rate for luxury hotels. In India GST for luxury hotels is 28 per cent and another 5 per cent for booking, which means the effective tax is around 33 per cent. Secondly the GST refund is very complicated for foreign tourists. Look at GST rates worldwide. Thailand and Malaysia have just 6 per cent, in China it is 5 per cent. Other than India the highest tax on tourism sector is in Italy, which is 10 per cent. There is no comparison between 10 per cent tax and effective 33 per cent tax. We are losing business due to this high tax structure. How can we grow the industry and attract foreign tourists when the tax rate is 33 per cent? The Union government is very keen to bring down tax on tourism and has requested state governments to resolve it in the GST Council. The ball is now in the court of state governments which should agree to reduce GST on tourism sector to an affordable level. This would not only help the domestic tourism sector but would also make India a very attractive and affordable destination.

Q: Besides promoting tourism industry directly, what else should be done to promote this sector?

A: Sorry to say but there is an indirect campaign abroad by some foreign media to malign the Indian image. They project a small incident as a big incident to give an impression that India is highly unsafe. So as Indians it is our responsibility to hit back against such dirty campaigns. Unfortunately, there are some politicians who also indulge in such practices to project India as an insecure destination. I request all people, irrespective of their political affiliations, not to play into the hands of those who are maligning India’s image. Just imagine whom we are helping. By saying one wrong word against India we are discouraging tourists who are keen to visit India. I share with you an interesting observation. The central government has launched Swachh Bharat Mission. With the help of state governments and local bodies we managed to bring down open defecation to negligible level, which was 62 per cent before the campaign started. We are proud of it. Can you imagine tourism sector is also one of the biggest beneficiaries of the campaign? A positive message went abroad that India is cleaner now. A small initiative not only changed India’s image abroad but also brings more foreigners and revenue into it. All Indians should work like a team to promote India’s image abroad.